Sunday, September 25, 2011

Has the Collapse Already Happened?

Well, here we are at 100 posts. So to celebrate, I thought I would give a brief roundup of where we are as a country. It is one of the conceits of this blog that the United States is essentailly crumbling as a society. As an American, I take no pleasure in making that statement, and I wish it were not so, but pretending does not make reality go away. In order to understand our world today, we need to know where we are. Many of these statistics have just come out over the past few weeks, and they are shocking. Although all the sources are taken from the mainstream media, the media avoids any discussion of the ramification, much less asking the question of whether society as a whole is failing. After all, their job is to sell advertising. But like a Seurat painting where the whole picture is comprised of a series of small colored dots, I think there is a larger picture being painted here.

To begin with, and as a background, please read this post by Immaneul Wallerstein. In an amazingly brief post, he summarizes everything that has happened since the end of the Second World War:

http://www.binghamton.edu/fbc/commentaries/

So lets sum up what we've learned over the past few months. All statements are factual.


To begin with, the United States now has more people in poverty since the end of the Second World War. One out of every six Americans is "officially" in poverty:

In yet another sign that the Great Recession cuts deep and long--the number of Americans living below the official poverty line reached 46.2 million, the highest in 52 years since the Census Bureau started tracking the figures in 1959.


The overall poverty rate also climbed to a 17-year high at 15.1%, which means 1 in 6 Americans are living below poverty line largely due to the high unemployment and underemployment rate. The official poverty line for 2010 is defined as an annual income of $22,314 for a family of four, and $11,139 for an individual.


Poverty among blacks and hispanics is higher than 1 in 4. Almost 1 in 4 - 22 percent of those under 18 years of age are in poverty:


The Census Bureau data also showed that poverty among black and Hispanic people was much higher than for the overall US population last year - at 27.4% and 26.6% respectively.


Outside of the poverty line, the average annual US household income fell 2.3% in 2010 to $49,445 (£31,228).


Even younger Americans were also strongly affected. Twenty-two percent of those under 18 were living under the poverty line - up from from 20.7% in 2009.

http://www.bbc.co.uk/news/business-14903732

Three out of four of those below the poverty line work: half have full-time jobs, a quarter work part time. Only a quarter do not work at all.

http://www.nytimes.com/2011/09/17/opinion/blow-for-jobs-its-war.html

The medium income in America has fallen to what it was in 1997, despite record corporate profits:

The Census Bureau's annual report released on Tuesday, Sept. 13 gives a very grim snapshot of American households in 2010. As the U.S. economy expanded 3% in 2010, and corporations reported good profits, the gains are not trickling down to workers. The median household income in 2010 dropped to $49,445, which is virtually unchanged from the level in 1997. Overall, household income has fallen by 6.4% since the recession began in December 2007


Moreover, income inequality across households also increased between 2009 and 2010. According to CNNMoney, adjusted for inflation, the middle-income family only earned 11% more in 2010 than they did in 1980, while the richest 5% in America saw their incomes surge 42%.

http://www.econmatters.com/2011/09/us-economy-lost-decade-into-great.html

That means that 50% of American households (the median) make $49,400 or less.

Only 55 percent of young Americans have jobs, also the lowest percentage since World War 2:

Unemployment among young adults is at its highest point since World War II, new data show. And it's having a disconcerting impact on the trajectory of their careers and lives.

“We have a monster jobs problem, and young people are the biggest losers," Andrew Sum, an economist with the Center for Labor Market Studies at Northeastern University told the Associated Press.

Just 55.3 percent of people between 16 and 29 were employed in 2010 on average, the according to new figures released by the Census Bureau. That represents an enormous drop from 67.3 percent in 2000. Among teens the figure was less than 30 percent.

http://news.yahoo.com/blogs/lookout/battered-downturn-young-americans-put-off-adulthood-160406776.html

No new net jobs have been created in the past ten years, depite an addition thirty million people added to the U.S. population:

In the face of the most stimulative fiscal and monetary policies in our history, we have experienced the loss of over 7 million jobs, wiping out every job gained since the year 2000. From the moment the Obama administration came into office, there have been no net increases in full-time jobs, only in part-time jobs. This is contrary to all previous recessions. Employers are not recalling the workers they laid off from full-time employment.

The real job losses are greater than the estimate of 7.5 million. They are closer to 10.5 million, as 3 million people have stopped looking for work. Equally troublesome is the lower labor participation rate; some 5 million jobs have vanished from manufacturing, long America's greatest strength. Just think: Total payrolls today amount to 131 million, but this figure is lower than it was at the beginning of the year 2000, even though our population has grown by nearly 30 million.

The most recent statistics are unsettling and dismaying, despite the increase of 54,000 jobs in the May numbers. Nonagricultural full-time employment actually fell by 142,000, on top of the 291,000 decline the preceding month. Half of the new jobs created are in temporary help agencies, as firms resist hiring full-time workers.

Today, over 14 million people are unemployed. We now have more idle men and women than at any time since the Great Depression. Nearly seven people in the labor pool compete for every job opening. Hiring announcements have plunged to 10,248 in May, down from 59,648 in April. Hiring is now 17 percent lower than the lowest level in the 2001-02 downturn. One fifth of all men of prime working age are not getting up and going to work. Equally disturbing is that the number of people unemployed for six months or longer grew 361,000 to 6.2 million, increasing their share of the unemployed to 45.1 percent. We face the specter that long-term unemployment is becoming structural and not just cyclical, raising the risk that the jobless will lose their skills and become permanently unemployable.

Don't pay too much attention to the headline unemployment rate of 9.1 percent. It is scary enough, but it is a gloss on the reality. These numbers do not include the millions who have stopped looking for a job or who are working part time but would work full time if a position were available. And they count only those people who have actively applied for a job within the last four weeks.

Include those others and the real number is a nasty 16 percent. The 16 percent includes 8.5 million part-timers who want to work full time (which is double the historical norm) and those who have applied for a job within the last six months, including many of the long-term unemployed. And this 16 percent does not take into account the discouraged workers who have left the labor force. The fact is that the longer duration of six months is the more relevant testing period since the mean duration of unemployment is now 39.7 weeks, an increase from 37.1 weeks in February.

The inescapable bottom line is an unprecedented slack in the U.S. labor market. Labor's share of national income has fallen to the lowest level in modern history, down to 57.5 percent in the first quarter as compared to 59.8 percent when the so-called recovery began. This reflects not only the 7 million fewer workers but the fact that wages for part-time workers now average $19,000—less than half the median income.

http://www.usnews.com/opinion/mzuckerman/articles/2011/06/20/why-the-jobs-situation-is-worse-than-it-looks

According to John Williams of shadowstats.com, after you add in all short-term discouraged workers, all long-term discouraged workers and all Americans that are working part-time because they cannot find full-time employment, the real unemployment rate should be approximately 23 percent.

Nearly half of Americans say that they definitely or probably couldn’t come up with $2,000 in 30 days, according to new research, raising concerns about the financial fragility of many households:

In a paper published by the National Bureau of Economic Research, Annamaria Lusardi of the George Washington School of Business, Daniel J. Schneider of Princeton University and Peter Tufano of Harvard Business School used data from the 2009 TNS Global Economic Crisis survey to document widespread financial weakness in the U.S. and other countries.

The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies.

Lusardi, Schneider and Tufano also looked at the ways in which people coped with an unexpected expense. Most would use multiple methods ranging from dipping into savings, asking for help from family and friends, using loans or credits cards, taking out payday loans or selling possessions. “Taken together with those who would pawn their possessions, sell their home, or take out a payday loan, 25.7% of respondents who were asked about coping methods (equal to 18.6% of all respondents) would come up with the funds for an emergency by resorting to what might be seen as extreme measures,” the authors write. “Along with the 27.9% of respondents who report that they could certainly not cope with an emergency, this suggests that approximately 46.5% of all respondents are living very close to the financial edge.”

http://blogs.wsj.com/economics/2011/05/23/nearly-half-of-americans-are-financially-fragile/

This may be why credit card debt is rising once again:

According to a new study from CardHub.com, we’re on track to increase our collective credit card debt by $54 billion in 2011. We added only $9 billion in new credit card debt in 2010, and actually reduced our credit card debt in 2009 — so this is a significant reversal. All told, Americans now have roughly $772 billion in outstanding credit card balances.

http://moneyland.time.com/2011/09/14/54-billion-closer-to-our-next-financial-crisis/#ixzz1YvLWWzYB

Only the most educated 3 percent saw wage gains between 2000 and 2010. Even those with Masters degrees saw falling wages over a decade. Not stagnant, falling:

http://blogs.wsj.com/economics/2011/09/19/only-advanced-degree-holders-see-wage-gains/

And notice who is in that 3 percent: MBA's, Lawyers and Ph.D's. Most of the Harvard/Yale/Princeton set are in this category, and have certainly skewed the data upward. Most PhD.'s work in universities who have seen their tuition increase. Joing that 3 percent will be nearly impossible for most Americans in the future. Education will almost certainly be out of reach, if it isn't already. Over the past 10 years, the cost of college has risen by 60 percent at private colleges, and nearly doubled at public colleges:

Meanwhile, colleges are bidding up tuition prices faster than a hedge fund manager at an art auction. Over the past 10 years the cost of private college has jumped more than 60%, nearly three times as much as incomes over the same period, and will now set you back $42,000 a year on average.

Prices at public colleges have shot up even more, nearly doubling to $21,000 for in-state students. Got younger kids? By 2020 you're looking at a four-year bill that's likely to top $240,000 for private schools and $155,000 at public universities. Sure there's financial aid, but scholarships aren't keeping up with tuition inflation. So long, retirement hopes; hello again, boss.

http://money.cnn.com/2011/09/08/pf/college/tuition_costs.moneymag/index.htm

According to The New York Times, colleges are now recruiting based mainly on the student's ability to pay the enormous tuition amounts without loans:

Money is talking a bit louder in college admissions these days, according to a survey to be released Wednesday by Inside Higher Ed, an online publication for higher education professionals.

More than half of the admissions officers at public research universities, and more than a third at four-year colleges said that they had been working harder in the past year to recruit students who need no financial aid and can pay full price, according to the survey of 462 admissions directors and enrollment managers conducted in August and early September.

Similarly, 22 percent of the admissions officials at four-year institutions said the financial downturn had led them to pay more attention in their decision to applicants’ ability to pay.

http://www.nytimes.com/2011/09/21/education/21admissions.html?_r=1

Student loan debt is higher than credit card debt, at over a trillion dollars. Defaults are on the rise:

A recent study by the Institute for Higher Education Policy found that for every borrower who defaults, at least two more fall behind in payments. The study found that only 37 percent of borrowers who started repaying their student loans in 2005 were able to pay them back fully and on time.

The high default rate at for-profit colleges, the fastest-growing sector of higher education, has become an increasing concern for the government, since such institutions depend on federal student aid for more than 80 percent of their revenues. Last spring, in internal documents gathered from the publicly traded for-profit colleges for hearings on the student debt problem, the Senate Health Education Labor and Pensions Committee found that some companies estimated that their students had staggeringly high lifetime default rates — in one case, 77.7 percent.

http://www.nytimes.com/2011/09/13/education/13loans.html?_r=1&adxnnl=1&adxnnlx=1316914624-pc6aQUuTDx2/jABttWMeqA

Even before college, over the past decade, the cost of raising a middle-income child has risen by 40 percent:

According to the US Dept of Agriculture, the cost of raising a child in a middle-income family has increased by 40 percent over the past ten years. Every major category of child-rearing expense has seen steep increase: day-care, education, food, gas, medical insurance, and so on. At this rate, childrearing may become a luxury item for America's increasingly wealthy super-rich.

http://boingboing.net/2011/09/22/cost-of-raising-middle-income-child-in-usa-increases-by-40-in-ten-years.html

Are we headed for a demographic collapse a la Russia or Japan? I think so.

15 percent of the United States population is on food stamps, including many who have jobs:

(Reuters) - Genna Saucedo supervises cashiers at a Wal-Mart in Pico Rivera, California, but her wages aren't enough to feed herself and her 12-year-old son.

Saucedo, who earns $9.70 an hour for about 26 hours a week and lives with her mother, is one of the many Americans who survive because of government handouts in what has rapidly become a food stamp nation.

Altogether, there are now almost 46 million people in the United States on food stamps, roughly 15 percent of the population. That's an increase of 74 percent since 2007, just before the financial crisis and a deep recession led to mass job losses.

At the same time, the cost doubled to reach $68 billion in 2010 -- more than a third of the amount the U.S. government received in corporate income tax last year -- which means the program has started to attract the attention of some Republican lawmakers looking for ways to cut the nation's budget deficit.

While there are clearly some cases of abuse by people who claim food stamps but don't really need them, for many Americans like Saucedo there is little current alternative if they are to put food on the table while paying rent and utility bills.

"It's kind of sad that even though I'm working that I need to have government assistance. I have asked them to please put me on full-time so I can have benefits," said the 32-year-old.

She's worked at Wal-Mart for nine months, and applied for food stamps as soon as her probation ended. She said plenty of her colleagues are in the same situation.

http://www.reuters.com/article/2011/08/22/us-usa-poverty-foodstamps-idUSTRE77L45Z20110822

Here are some salient facts from The Economic Collapse blog:

The percentage of American men that are employed continues to plummet. In July, only 63.5 percent of all men in the United States had a job. Since 1948, that number has only been lower one time (63.3 percent in December 2009).

Back in 1980, less than 30% of all jobs in the United States were low income jobs. Today, more than 40% of all jobs in the United States are low income jobs. That's nearly half. Back in the 1950s, manufacturing accounted for about 28 percent of U.S. GDP. Last year, it accounted for just 11.7 percent. America's largest employer used to be General Motors. It is now Wal-Mart. The second biggest employer in the U.S. is McDonalds.

Between 1969 and 2009, the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.

According to a report released in February from the National Employment Law Project, higher wage industries are accounting for 40 percent of the job losses in America but only 14 percent of the job growth. Lower wage industries are accounting for just 23 percent of the job losses but 49 percent of the job growth.

Half of all American workers now earn $505 or less per week.

Last year, 19.7% of all U.S. working adults had jobs that would not have been enough to push a family of four over the poverty line even if they had worked full-time hours for the entire year.

The number of Americans that are going to food pantries and soup kitchens has increased by 46% since 2006.

According to the Washington Post, the average yearly income of the bottom 90 percent of all U.S. income earners is now just $31,244.

When you look at the ratio of employee compensation to GDP, it is now the lowest that is has been in about 50 years.

At this point, the poorest 50% of all Americans now control just 2.5% of all of the wealth in this country.

http://theeconomiccollapseblog.com/archives/poverty-in-america-a-special-report

Between 1999 and 2009, total spending on health care in the United States nearly doubled, from $1.3 trillion to $2.5 trillion. During the same period, the percentage of the nation’s gross domestic product devoted to health care climbed from 13.8 percent to 17.6 percent. Per person health care spending grew from $4,600 to just over $8,000 annually, according to a Rand Corporation Study.

http://www.nytimes.com/2011/09/17/opinion/blow-for-jobs-its-war.html

Just about 50 million people lacked health insurance last year, about 16.3% of the population. America is the only advanced industrialized country to link health care access to employment status.

In 2008, the latest year for reliable statistics, the U.S. spent more than $2.3 trillion on health care, three times more than in 1990.

Comparing these numbers to other industrialized countries, the U.S. spends a greater share of gross domestic product on health care, by as much as 50 percent in some cases.

The reasons Americans pay more, say analysts, boils down to a complicated system that requires a profit motive.

"The U.S. pays higher costs for the same service in part because the government plays a smaller role in negotiating prices," says Gerry Wedig, associate professor of business administration at the University of Rochester. "Overseas, governments compress patient demand by acting as a tough regulator and negotiator for the whole system."

"Our labor costs are higher for doctors, nurses and other health care professionals than other parts of the world," says Paul Keckley, executive director for Deloitte's Center for Health Solutions. "Specialists easily make more money here than in other countries."

A private insurance market and an overworked legal system are also behind the cost differential, says professor Colin Pritchard of Bournemouth University in Great Britain and who has co-written a comparison study on health care costs.

"Profits have to be made by insurance companies, so premiums are high for some people considered bad risks," says Pritchard. "And the U.S. culture is litigious, so more protective medicine needs to be done and there are often unnecessary and costly investigations."

Medical paper work alone is enough to help drive up costs, argues Robert LeFlar, professor of law and the University of Arkansas and a specialist in comparative health law.

"Other nations save on health care costs by simplifying administration of the system," LeFlar explains. "Countries like Japan and Canada rely on private sector professionals but pay them through a single government plan. That eliminates paperwork that drowns doctors and patients."

There's also the cost of medicine, such as prescription drugs, for which U.S. patients pay more, says Lee Graczyk, lead organizer or RxRights, an advocacy group for cheaper medicine and importation of foreign drugs.

"Americans pay twice as much for drugs compared to other nations," says Graczyk.

Americans currently average about $7,538 a year in medical costs, including out-of-pocket expenses. Meanwhile, the average cost per per person, including taxes for 'sickness funds' for industrialized countries like Great Britain, Norway and Switzerland is $2,995, according to the Organization for Economic Co-operation and Development.

Health care in the U.S. is not going to get any cheaper in the years ahead, analysts say. The Congressional Budget Office projects that total national spending on health care in the U.S. will reach 31 percent of GDP by 2035.

http://www.cnbc.com/id/44180042

In 2009, if you were to add up the total fortune of America's richest 400 people, that amount—$1.27 trillion—would be more than the holdings of the bottom 50 percent of Americans, less than $1.22 trillion.( And in fact, in 2010 the net worth of the Forbes 400 jumped to $1.37 trillion.) That top 400, by the way, represents .0000035 percent of all households in the United States.

http://www.good.is/post/the-400-richest-americans-are-now-richer-than-the-bottom-50-percent-combined/

Most comsuming is now done by the very wealthy:

According to new research from Moody’s Analytics, the top 5% of Americans by income account for 37% of all consumer outlays. Outlays include consumer spending, interest payments on installment debt and transfer payments. By contrast, the bottom 80% by income account for 39.5% of all consumer outlays.

It is no surprise, of course, that the rich spend so much, since they earn a disproportionate share of income. According to economists Emmanuel Saez and Thomas Piketty, the top 10% of earners captured about half of all income as of 2007.

http://blogs.wsj.com/wealth/2010/08/05/us-economy-is-increasingly-tied-to-the-rich/tab/print/

As the middle class shrinks, marketers are aiming more and more at high-end earners and abandoning everyone else. The United States level of income equality is now equal to Mexico and the Philippines:

To monitor the evolving American consumer market, P&G executives study the Gini index, a widely accepted measure of income inequality that ranges from zero, when everyone earns the same amount, to one, when all income goes to only one person. In 2009, the most recent calculation available, the Gini coefficient totaled 0.468, a 20% rise in income disparity over the past 40 years, according to the U.S. Census Bureau.

"We now have a Gini index similar to the Philippines and Mexico—you'd never have imagined that," says Phyllis Jackson, P&G's vice president of consumer market knowledge for North America. "I don't think we've typically thought about America as a country with big income gaps to this extent."

http://online.wsj.com/article/SB10001424053111904836104576558861943984924.html

Major power outages have more than doubled in the last decade. Blackouts disrupt power to at least a third of U.S. homes each year, and studies show the number of outages is rising. Many electrical transmission lines are outdated, and parts of the grid date back to the time of Thomas Edison.

http://www.scientificamerican.com/article.cfm?id=recent-blackout-highlights-nations

America's internet service quality has fallen to twenty-fifth worldwide, just below Romania.

https://www.commondreams.org/view/2011/09/17-0

The United States of America has an incarceration rate of 743 per 100,000 of national population (as of 2009), the highest in the world. In comparison, Russia has the second highest 577 per 100,000, Canada is 123rd in the world with 117 per 100,000, and China has 120 per 100,000. While Americans only represent about 5 percent of the world's population, one-quarter of the entire world's inmates are incarcerated in the United States.

http://en.wikipedia.org/wiki/United_States_incarceration_rate

The United States has the highest rate of incarceration in the world, with 2.3 million Americans behind bars, a 300 percent increase since 1980, the report states. This country has more inmates than the top 35 European countries combined.

"One in 87 working-aged white men is in prison or jail, compared with 1 in 36 Hispanic men and 1 in 12 African-American men. More young (20-34) African-American men without a high school diploma or GED are currently behind bars (37 percent) than employed (26 percent)."

Perhaps most disturbing is the 2.7 million American children who have a parent behind bars, a massive increase from 25 years ago when 1 in 125 kids had an incarcerated parent compared to 1 in 28 today. And, "two-thirds of these children's parents were incarcerated for non-violent offenses," the report says.

"One in 9 African-American children (11.4 percent), 1 in 28 Hispanic children (3.5 percent) and 1 in 57 white children (1.8 percent) have an incarcerated parent," according to Collateral Costs.

The report notes that "serving time reduces hourly wages for men by approximately 11 percent, annual employment by 9 weeks and annual earnings by 40 percent." The typical former inmate, by age 48, will have earned $179,000 less than if he had never been incarcerated.

Before being imprisoned, more than two-thirds of male inmates had jobs and more than half were the primary source of financial support for their children, the study shows. When a released inmate can't take care of his family, guess who bears the costs?

According to the study, "Children with fathers who have been incarcerated are significantly more likely than other children to be expelled or suspended from school (23 percent compared with 4 percent).

And noting that education and parental income are strong indicators of children's future economic mobility, the report points out: "Family income averaged over the years a father is incarcerated is 22 percent lower than family income was the year before a father is incarcerated. Even in the year after the father is released, family income remains 15 percent lower than it was the year before incarceration."

http://www.mcclatchydc.com/2010/10/10/101638/commentary-incarcerations-impact.html#ixzz1ZTplPXAU




In these statistics we concentrated on the state of America's domestic economy. We have not even discussed state and local bankruptcies, the national debt, the Eurozone crisis, or environmental catastrophes like natural disasters, droughts, Peak Oil and Global Warming.

No wonder the mood in America is so bleak. I present these statistic not to depress you, although it may seem that way, but to let you know what's really going on. We get so wrapped up in our individual lives sometimes, that we cannot see the forest for the trees. If our house were burning down around us, only by knowing that it is burning down can we have some hope of taking appropriate measures to escape. In that sense, I hope this entry acts as sort of a fire alarm.

What is particularly striking to me is how many of these statistics are the worst since the Second World War! And, of course, most of these records were only began after the War, so it is reasonable to conclude that they are the worst since the end of the Great Depression. Even the true unemployment rate, which takes into account people who are unable to find the jobs they really need, temporary and part-time work, discouraged workers, and people dropping out of the workforce, is at Great Depression levels. And I don' t think that is even couting the number of people in America's prisons - the highest number in the world. Jobs have failed to keep up with population growth for years, and companies continue to downsize, automate and outsource to shore up profits. It seems that all of capitalism's progress since the Great Depression is being erased, and even the social safety net that was put in place then is under constant attack by politicians in both parties. Even the overall number of jobs is misleading, since most of the people in poverty actually have jobs!

The other summary fact is that wages have stagnated since the 1970's despite increasing corporate profits, and wages are unchanged since 1996 levels. Yet the costs of everything from health care to child rasing to education to transportation has risen anywhere from 40 to over 200 percent! How can an economy based on consumer spending sustain itself? Can we have an economy where only the very rich can afford goods and services, while the rest of the population lives in perpetual debt servitude?

Now, I'm going to make a statement here - I do not think the above situation was caused by high taxes and too many regulations on business. Our current politics offers us no hope of fixing the situation. As Decline of the Empire put it succinctly, "when was the last time a problem got fixed in America?" In the future, we will discuss what I believe to be the source of these problems, and ways they can be fixed. Unfortunately, I have no faith that the fixes will be implemented. Therefore, we will discuss steps that you can take in you own life, armed with the above knowledge, to try and create a livable, decent life for yourself.

I will end with a quote from Jakob Augstein in Der Speigel, and an excellent video interview of Dmitry Orlov, who dispenses some good advice on how to live in a collapsing empire:

By any definition, America is no longer a Western nation.

The US is a country where the system of government has fallen firmly into the hands of the elite. An unruly and aggressive militarism set in motion two costly wars in the past 10 years. Society is not only divided socially and politically -- in its ideological blindness the nation is moving even farther away from the core of democracy. It is losing its ability to compromise.

The country's social disintegration is breathtaking. Nobel economist Joseph Stiglitz recently described the phenomenon. The richest 1 percent of Americans claim one-quarter of the country's total income for themselves -- 25 years ago that figure was 12 percent. It also possesses 40 percent of total wealth, up from 33 percent 25 years ago. Stiglitz claims that in many countries in the so-called Third World, the income gap between the poor and rich has been reduced. In the United States, it has grown.

Economist Paul Krugman, also a Nobel laureate, has written that America's path is leading it down the road to "banana-republic status." The social cynicism and societal indifference once associated primarily with the Third World has now become an American hallmark. This accelerates social decay because the greater the disparity grows, the less likely the rich will be willing to contribute to the common good. When a company like Apple, which with €76 billion in the bank has greater reserves at its disposal than the government in Washington, a European can only shake his head over the Republican resistance to tax increases. We see it as self-destructive.

The same applies to America's broken political culture. The name "United States" seems increasingly less appropriate. Something has become routine in American political culture that has been absent in Germany since Willy Brandt's Ostpolitik policies of rapprochement with East Germany and the Soviet Bloc (in the 1960s and '70s): hate. At the same time, reason has been replaced by delusion. The notion of tax cuts has taken on a cult-like status, and the limited role of the state a leading ideology. In this new American civil war, respect for the country's highest office was sacrificed long ago. The fact that Barack Obama is the country's first African-American president may have played a role there, too.

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